Iger’s Existential Question

On a call with analysts, Bob Iger sounded like it had been a sobering three months in Burbank. Photo: Jay L. Clendenin/Los Angeles Times via Getty Images
William D. Cohan
May 14, 2023

My, my, it’s tough out there in Big Media these days: streamers are losing subscribers, most are losing money, linear TV is in decline, there’s a writers strike that looks like it’s here to stay, and Wall Street research analysts and investors are losing faith. What’s a legendary C.E.O. like Bob Iger, now some six months into his second tour of duty, to do? 

The question is becoming harder to answer, especially after Disney announced last week that it lost some 4 million streaming subscribers in its latest quarter but nevertheless managed to cut its streaming losses to around $660 million, from more than $1 billion—exceeding analyst expectations—and yet the stock still got pounded. As Warren Buffett said last weekend regarding Berkshire’s large and losing investment in Paramount Global, the trouble is that there are “a bunch of companies who don’t want to quit” highly-expensive, extremely expensive, and low-margin streaming business. Ultimately, profitability requires fewer competitors and higher prices. 

Buffett, who has always been skeptical of the economics of streaming, went on to compare the dilemma to what it was like for him to own a gas station in Omaha when he was in his 20s: There was one station across the street that kept cutting prices every time he did, and so there was just no way for him to increase his margin. In other words, unless the price that people are willing to pay increases dramatically, the streaming business is not going to be a good one for the foreseeable future. (Many on Wall Street assume that Berkshire’s Paramount position was advocated by Buffett and Charlie Munger’s heir apparents. This is not investment advice.)